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Blackstone, the world’s richest asset management company, has agreed to pay $6 billion to buy Home Partners of America, a company that owns about 17,000 rental houses across the U.S., The Wall Street Journal reported.
Blackstone entered the rental housing business after the Great Recession, forming Invitation Homes as a subsidiary that bought tens of thousands of foreclosed houses when banks dumped them at bargain prices.
Blackstone sold out of Invitation Homes in 2019, when the subsidiary had 80,000 homes in its portfolio, making it the largest U.S. landlord in single-family rental homes.
Blackstone re-entered the rental business last year, putting $240 million with Toronto-based Tricon Residential Inc. and budgeting $1 billion to buy houses this year. (See “Invitation Homes to Buy $1 Billion Worth of Houses This Year,” Trends Journal, 1 June, 2021.)
The giant firm’s Home Partners purchase indicates that institutional investors see stronger gains ahead in the rental housing industry.
Cerebus Capital Management, Brookfield Asset Management, JP Morgan Asset Management, and Rockpoint Group also have bet big on firms that own portfolios of single-family rental homes.
However, large corporate landlords hold only about 300,000 houses to date, about 2 percent of U.S. single-family homes, according to a report from Amherst Pierpont Securities; 85 percent of rental homes are owned by landlords with no more than 10 properties.
Even so, analysts see rents continuing to climb as home prices remain high, barring more families lacking cash or high incomes from buying a home, analysts told the WSJ.
TRENDPOST: Although corporate landlords own just a fraction of the country’s single-family homes, that fraction is concentrated in the most desirable markets, giving those corporations even more presence in the places people most want to live.
As we noted in “Invitation Homes to Buy $1 Billion Worth of Houses This Year,” Trends Journal, 1 June, 2021, corporations are buying houses out from under families by offering cash on the spot instead of forcing sellers to wait while mortgage applications are approved – or, increasingly in today’s red-hot market, rejected.
TREND FORECAST: Millennials are entering the age at which most people buy homes. However, high prices, high down payment requirements, and cash-rich corporations competing for good-quality homes mean that fewer and fewer families will be able to build wealth by owning their own homes.